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A new price test in geographic market definition – an application to german retail gasoline market

Melissa Bantle () and Matthias Muijs ()
Additional contact information
Melissa Bantle: Helmut Schmidt University, Hamburg, Postal: Holstenhofweg 85, 22043 Hamburg
Matthias Muijs: University of Hohenheim, Postal: 70593 Stuttgart

No 180/2018, Working Paper from Helmut Schmidt University, Hamburg

Abstract: Market delineation is a fundamental tool in modern antitrust analysis. However, the definition of re- levant markets can be very difficult in practice. This preliminary draft applies a new methodology combining a simple price correlation test with hierarchical clustering -a method known from machine learning- in order to analyze the competitive situation in the German retail gasoline market. Our analysis reveals two remarkable results: At first, there is a uniform pattern across stations of the same brand regarding their maximum daily prices which confirms the claim that prices are partly set centrally. But more importantly, price reactions are also influenced by regional or local market conditions as the price setting of gasoline stations is strongly affected by commuter routes.

Keywords: market definition; gasoline market; price tests; competition; k-means clustering; hierarchical clustering (search for similar items in EconPapers)
JEL-codes: D22 D40 D43 L10 (search for similar items in EconPapers)
Pages: 46 pages
Date: 2018-08-29
New Economics Papers: this item is included in nep-big, nep-com, nep-ene, nep-ind and nep-ure
References: View references in EconPapers View complete reference list from CitEc
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